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Wal-Mart Posts Soft Dec. Sales; Cites Strength In CE

Bentonville, Ark. — Wal-Mart ended 2006 on an off note by posting its weakest December same-store sales of the decade.

But the world’s largest retailer said its steep holiday promotions and targeted marketing helped consumer electronics turn in a “very strong performance” last month.

Total sales at Wal-Mart’s flagship discount stores rose 3.1 percent to $28.8 billion for the five weeks, ended Dec. 29, but same-store sales edged up only 1.3 percent, compared with the prior year’s 2.4 percent gain.

Wal-Mart attributed the weak comps to the lingering effect of Hurricanes Katrina and Rita, which boosted revenue with emergency and replacement sales during the back half of 2005. But analysts have also ascribed the soft performance to disruptive store renovations and an upscale remerchandising effort that may have put off Wal-Mart’s core lower-income customers.

Yet amid the downturn, CE, one of a handful of must-win categories avowed by the discount chain, proved to be a shining light. “We believe Wal-Mart is becoming more of a destination for electronics as consumers recognize that we have a leadership position on low prices,” said Eduardo Castro-Wright, president/CEO of the company’s U.S. stores division. “Customers liked the values they found in digital TVs, digital audio products, computers and gaming systems.”

Castro-Wright said higher marketing spending and “very focused messaging” helped drive CE sales in December. He added that post-Christmas marketing and special promotions on CE products also aided gift card redemptions during the last week of the month.

Wal-Mart’s wholesale club division fared better, with Sam’s Club’s net sales rising 5.6 percent to $4.9 billion during the five-week period while comps grew 3.5 percent.

By comparison, Target’s total sales climbed 9.9 percent to $9.3 billion for the five weeks Dec. 30 and comps increased 4.1 percent. The company cited CE among its strongest comp sale gainers, and said its inventories coming out of the holidays are in “very good condition.”

At Costco, net sales totaled $7.2 billion for the five weeks, ended Dec. 31, an increase of 14 percent year-over-year. Same-store sales grew an industry-leading 9 percent, with computers, A/V and white goods among the company’s top-selling categories. Comp sales were boosted 3 percent by the extra selling day before Christmas, and average ticket was up 4 percent while traffic increased 1.5 percent.

BJ’s said net sales rose 5 percent to $1 billion for the five weeks ended Dec. 30 while comps increased 0.6 percent. Strong same-store sales gains were seen in CE and video games, while pre-recorded video comps were weak. BJ’s also announced the return to the company of two senior execs in their former positions: Laura Sen as merchandising and logistics executive VP, and Ed Gillooly as marketing and membership senior VP.

And novelty CE retailer Sharper Image reported a 22 percent decline in net sales last month, to $117.7 million, and a 20 percent decrease in same-store sales.